Hotelier Profile: Rohit Ranchhod, Owner & CEO, American Hospitality Services, Inc.

As a principal of American Hospitality Services, Inc., I have extensive experience with both hotel and commercial development. I currently manage and supervise four hotel Brands across nine different properties—Marriott, Hilton, IHG & G6, and have several new JV development/management operations in the works. We are always open to assisting both seasoned and novice developers in accomplishing their goals.

While building our current hotel portfolio, I sat on the California Restaurant Association Board for over 20 years and was a member of the Owner’s Council of the California Hotel & Lodging Association. Additionally, I serve as a Partner and Principal in the California State Regional Center that specializes in EB-5 investment across Northern California.

I especially take pride in being the co-founder and board member of The Jags Solanki Memorial Fund for Ovarian Cancer—a 501(c)3 that raises money for innovative cancer research at the UC Davis Comprehensive Cancer Center. To date, we have raised and donated $250,000 towards Cancer research and look forward to continuing our foundation’s educational endeavors focused on exposing the silent symptoms of ovarian cancer (www.knowyourbody.info).

My Hospitality Management team and I facilitate property entitlement, development, brand selection, operations, marketing, training, data tracking, and accounting as part of our turnkey services. Influenced by my 35+ years of hospitality experience, the mission of our company is to provide consistent and high-quality customer service to our guests and staff alike. Without our core team that is considered family—we could not possibly accomplish what we have and what we continue to do.

Rohit and business partner, Vinod Patel, at the construction site of their first hotel in 2003.

How did you come to be in the hospitality industry?

My journey began in the commercial sign fabrication and installation business. As owner operator, I targeted the various real estate firms throughout the Greater Sacramento region and successfully produced and installed their signage for over 10 years. After my tenured foray into installing signs for clients, I transitioned out of the sign business and into the food industry. I began with a restaurant in West Sacramento, and quickly grew my territory to a total of 10 locations. I was dedicated to food and beverage for about 8 years, however I transitioned out of the demanding food industry when a good friend of mine gave me the sage advice of focusing on real estate development. After extensive research on the hotel industry, an opportunity to develop a Holiday Inn Express & Suites surfaced and I decided to go all-in and pursue this venture. This first project was truly a daunting task—the timelines for the close of the property were short. My partner and I decided to sell all 10 restaurants and managed to accomplish this feat and successfully close on the property all within 60 days.

I was heavily involved throughout the development process, all while also simultaneously maintaining a consulting job in San Jose. It was a very uneasy time period, but my partners and I committed to working in every department so we could master all inputs required for turnkey development. That first development was the starting point of my passion and career in hotels, which has been my lifeblood for over 16 years now. I am truly grateful to have had that initial opportunity and experience. The commitment and dedication instilled into our first project is what AHSI proudly delivers to every development venture we pursue.

Rohit and Vinod helping to landscape the hotel prior to its opening.

What motivated you to pursue this career path?

I had met many successful people in the hospitality business, and through learning about their experiences within the industry, I had a strong desire to understand all the parameters surrounding hotels. Throughout the learning process, in tandem with my long-time partners Vinod Patel and Nitin Mohan, we decided it was our main goal to own a hotel franchise; as soon as we committed to our vision, we decided to jump into the industry with both feet, and I am happy to say we have never looked back.

What financing challenges did you encounter along the way and how did you overcome them?

Every development project has its own unique challenges, but to avoid too lengthy of a response, I will focus on our very first financing challenge! Understanding the various loan types, equity requirements and what best suits your development vision was a major life lesson. With the first project, we had to meet the equity requirements for the lender and it was quite a large sum of capital. As we developed the next hotel in 2006/2007, we switched brands while under construction—I would recommend avoiding this at all costs, but in this case, it was absolutely the correct decision. The key takeaway from that was to really know your brands and choose the best fit for each location.

While developing our next three hotels, we entered the recession. We opened a hotel in 2008, followed by two more in 2009. During our development/construction phase, one of our lenders was forcibly acquired by a large corporate bank, the other was taken over by the FDIC and eventually acquired by another national lender. I had to negotiate and re-negotiate construction loans, as well as take out loans. This required a detailed plan of action to present to the lenders, as well as an operational game plan to prove we could get all our hotels to perform and exceed the required DSCR. The silver lining—in the peak of the recession, we embarked on stealing significant market share due to the lack of new competition in the hospitality sector. Instead of reducing staff and sales, we increased marketing staff, implemented shuttle service where it made sense and secured liquor licenses to further differentiate ourselves. There were a lot of sleepless nights, but I am happy to say we kept the hotels by executing our operational game plan and refinancing the original lenders out within 3–5 years.

What was the most exciting moment of your career so far?

Getting approved to own and manage developments by all major brands, and in particular, the Marriott brands. I never thought I would be where I am today, so every day is very exciting and I look forward to many more exciting ventures in the years ahead.
What piece of advice do you wish someone had shared with you early in your career?
I would say, start with the right architect and the right contractor—do not look for the cheapest or seemingly easiest way, because as I previously stated, every development has its own unique set of challenges. Get referrals and references from the brands, cities and fellow hoteliers; you are building a legacy asset that requires significant capital and you need to start the project off right.

What is the most important personal quality and the most important professional quality a person could have that would help bring about success in your field?

Be prepared to take risks but take it upon yourself to evaluate the pros and cons of each risk associated with the project. Treat everyone with respect and learn how to put those development numbers together with the right information. Be a go-getter and do not let anyone tell you that you can’t do it! As a first generation American, being in the US is the greatest gift of all and we can’t take it for granted; this country is truly the land of opportunity. My life’s motto has always been, “If it is to be, it is up to me!”

What tips do you have for someone trying to secure financing for hotel development?

Always work backwards to understand your equity requirements. Conduct proper due diligence, for example, pay for a feasibility study; understand your entitled land values; get reputable contractor pricing; make sure all entitlements are in place with supporting documentation; and create cost contingencies within your project costing—these principals are really the foundation for your opportunity. Meet with your local lenders and inquire with the folks where you currently bank so you can understand their lending parameters and evaluate how their underwriting fits within your model. Shortlist lenders that have successfully placed hotel financing or find an experienced broker that has access to multiple lenders. If you don’t have experience, you may need a partner experienced in development and management to appease the brand and the lender. Ensure you conduct your own due diligence and understand the different types of lenders within the market (i.e. private funds, family offices, commercial banks, SBA, PACE financing, mezz financing, CMBS, etc.).